Quick Facts

Slovenia’s economy benefits from relatively high levels of regulatory efficiency and transparency. Business regulations have become more straightforward, and recent reductions in the corporate tax rate have increased the country’s competitiveness. Progress in privatizing inefficient state-owned companies has been made since 2013, albeit with some delays.

Economic Freedom Snapshot

2016 Economic Freedom Score: 60.6 (up 0.3 point)

Economic Freedom Status: Moderately Free

Global Ranking: 90th

Regional Ranking: 37th in Europe

Notable Successes: Rule of Law, Trade Freedom, and Monetary Freedom

Concerns: Management of Public Finance and Labor Freedom

Overall Score Change Since 2012: –2.3

Further growth in economic freedom in Slovenia will require strengthened management of public finance and development of a more dynamic financial sector. Containing entitlements is a key priority for fiscal consolidation, especially with the upward trajectory of age-related spending. Labor market reforms also have been delayed, hampering employment and productivity growth.

Background

Slovenian Democratic Party Prime Minister Janez Janša, whose government collapsed in February 2013, was convicted of corruption in June 2013 and began serving a two-year prison sentence in June 2014. In April 2015, his conviction was unanimously overturned by the Constitutional Court. In July 2014, Miro Cerar’s new SMC party won a plurality of seats in parliament. Instability has slowed privatizations and efforts to reduce the public sector, and the government still controls about half of the economy. Slovenia joined the European Union and NATO in 2004, adopted the euro in 2007, and joined the Organisation for Economic Co-operation and Development in 2010. The country has excellent infrastructure and an educated workforce.

Corruption is less prevalent in Slovenia than in many of its neighbors and usually takes the form of conflicts of interest involving contracts between government officials and private businesses. Only 5,000 of Slovenia’s 80,000 public servants are subject to financial disclosure laws. The judicial system is sound and transparent but comparatively inefficient and underresourced. Enforcement of private property rights protections is slow.

The top individual income tax rate is 50 percent, and the top corporate tax rate is 17 percent. Other taxes include a value-added tax and a property transfer tax. The overall tax burden equals 36.8 percent of total domestic income. Government spending has risen to 59.9 percent of GDP. The budget deficit remains over 5 percent of GDP, and public debt now equals over 80 percent of annual economic production.

With no minimum capital required, launching a business takes only six days, but it still takes more than two months to complete the necessary licensing requirements. Rigid labor regulations continue to hamper dynamic employment growth. To rationalize public spending, a select group of state-run companies was privatized, but the sale of the largest of them, Telekom Slovenije, ran into delays in 2015.

EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. State-owned enterprises distort the economy. Most economic sectors are open to foreign investment, but the overall investment regime lacks efficiency. Despite some progress, privatization of state-owned financial institutions has been uneven, and banking has been under strain.